Most Innovative Companies - Defense

Almost unknown to the public, the engineering and information-technology not-for-profit is the brains of the government's cutting-edge IT work and one of the premier specialists in adapting the latest research to military use. The expertise of one of the most educated workforces on the planet—65% of Mitre's 7,000 employees have advanced degrees—is applied to a wide range of projects, from cybersecurity to aircraft-system development. Top 50: No. 30

2. DARPA

The skunk works arm of the Pentagon, DARPA acts like a venture-capital firm, seeding some of the wildest ideas on the planet. Just this year, these have included bloblike, shape-shifting robots (developed by iRobot) and tiny unmanned aerial vehicles (UAVs) that fly like hummingbirds. It's difficult to think of any private company that spurs more innovation.

3. iRobot

The military has been quickly turning to robots for more and more battlefield tasks, and the engine of those innovations is iRobot, which began in an MIT lab in 1990. Recently, the Pentagon announced that it has awarded the firm a new contract to develop a next-gen successor to the PackBot, which is now the main workhorse for defusing improvised explosive devices (IEDs). Innovation All-stars

4. QinetiQ

Foster-Miller, a wholly owned subsidiary of QinetiQ, also makes battlefield robots—it's part of the "robot corridor" along a single stretch of highway outside of Boston. But the company has also been moving into a broader space, designing small-bore defense technology for 21st-century urban warfare, including a shoulder-mounted sniper detector that can locate a shooter who has fired a single round. Coming up: a battlefield generator that will create electricity from trash.

5. Northrop Grumman

The defense titan is working on what may be the Navy's biggest project for a generation: the newest class of nuclear-powered aircraft carriers. The company also produces cutting-edge flight systems for the next version of UAVs.

6. Raytheon

The defense giant has just delivered the newest prototypes for battlefield networking and is one of the leaders in the effort to develop the Navy's new stealth destroyer.

With both the Army and the Navy begging for more drones, the aerospace company's expertise in unmanned vehicles is in high demand. In addition to concept development work for NASA, Boeing is also readying late-stage testing for an up-to-now mythical beast: the air-to-ground laser, which it has begun demo'ing at trade shows. Innovation All-stars

9. Aurora Flight Sciences

A relatively small company in the defense sector, Aurora began some 20 years ago, when John Langford developed a human-powered glider while earning a PhD at MIT. Both an R&D lab and a producer of aerospace components, the firm plans this year to test a working model of a solar-powered UAV that's capable of staying aloft for five years.

10. ATK

Though ATK made its name as a space contractor, designing everything from rocket motors to solar panels for future space expeditions, it's now retooling itself. The company recently dedicated a new innovation center in upstate New York, which will become a think tank for green energy. The goal: to apply expertise gleaned from space technology to "breakthrough" solutions on earth, ranging from microgenerators to hydrogen storage.

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Even in these tough times, surprising and extraordinary efforts are under way in businesses across the globe. From politics to technology, energy, and transportation; from marketing to retail, health care, and design, each company on the following pages illustrates the power and potential of innovative ideas and creative execution.